Market Overview September

Sales slowing, slowing, gone

Prices show double digit declines

The declines in median selling prices on Real Estate on Maui were eye popping.  There were double digit drops in every category. 

The decline in condo prices was shocking at first blush, but when you take a hard look at the numbers, you see a bimodal distribution.  That is a high percentage of sales at the low end and another bubble at the high end and not much in the middle.  In fact there weren’t many condo sales, period.

The number of home sales was unchanged from the previous month.  Remember that was the slowest month for sales since January of this year, and that was the slowest month in the last 5 years. 

We are seeing an increased number of short sales, REO’s (bank owned properties) and foreclosures. 

It’s a great time to buy real estate in Maui.

Condo sales slow to a crawl

Sales shift from short term/vacation rental to residential

 
After an illogical rise in median prices last month, selling prices came crashing back to earth in September.  The median price fell a staggering 39% from $632,500 to $388,500.

You have to go back to August of 2005 to find a median price below $400,000 for condos on Maui.  It is also notable that in August of ’05 there were 187 condo sales compared to only 48 last month. 

Last month we wondered aloud, or at least in print, why we were not seeing a decline in selling prices.  So what is to blame for the precipitous drop this month?

It’s not the Democrats, it’s not the Republicans, but it could be timing, and it maybe Wailea.  That district has been contributing nearly 20 sales a month at median prices approaching the $2 million mark for much of the year. Most of those sales were pre-sold condos, under contract that were closing upon completion. 

This month there were only 8 sales in Wailea, still at a median of just under $2 million.

Over half of the condos sold were in developments that do not allow short term/vacation rental.  Those tend to be priced lower than vacation rentable units.  That may also indicate that people who would prefer a single family home are buying condos because that’s what they can afford and qualify for. 

Qualify – for those not familiar with the term, it is from ancient economic times when banks required a buyer to prove that s/he could actually afford to pay off the loan.

Just under one half of the condos sold were vacation rentable.  Most were in Kihei.  The median selling price for vacation rentable condos was $555,000 and the average was $908,306.

The WAM, the Wailea Adjusted Median, also declined sharply.  When we remove the influence of the high end, pre-sold Wailea units to get a more current, less biased look at the market, we see the adjusted median falling from $410,000 in August to $350,000 in September – a 17% decline.

So are prices declining?  Maybe not.  Maybe the only thing selling for all practical purposes are the lower end and the very high end properties.  Those in the middle, where most of the buyers are, are sitting and waiting to see what happens next.

So what will happen next?  Will sales continue to decline? 

No.

In the next 2 -3 months there should be a spike in sales when today’s short sales start closing. 

What will happen to prices?  Ask me next month.

Area Sales

The big change is that there were only 8 condos sold in Wailea down from last month’s 17. 

Kihei had a slight increase in sales, up to 19, but that is exactly half of what sold a year ago in September.  The median price also dropped compared to last month and the same month a year ago.

Napili – Honokowai held steady with 9 sales.  However, that is down from a year ago and the median price at $495,000 is also down. 

Kaanapali and Kapalua each had one sale. Lahaina had no sales.

High and Lows 

We finally had a Harbor Lights close at… $75,000.  This is a 2 bedroom, 1.5 bath condo with a view of the harbor.  It was sold in “as is” condition, and it was not a short sale.

At $3,125,000, the most expensive condo sold was at Hoolei in Wailea.  The condo is a 3 bedroom, 3.5 bath of 3,076 square feet. 

Potts’ Picks – Best Buys

Last month we said we would let you know why there are no sales at Harbor Lights. There are over 40 units, the lowest priced units on Maui, all showing as active on the Maui MLS.  It turns out there are offers in on many of those condos.  However, they won’t show as pending until the lender accepts an offer. 

Last month we liked an Iao Parkside IV-C. This month we like an Iao Parkside IV-A. It is a 2 bedroom, 2 bath listed at $254,000.  It  is bank owned, an REO, and list in the MLS #333798.

For this month’s best buy we are featuring the lowest priced 1 bedroom, 1 bath unit at Kaanapali Shores.  Priced at $420,000, MLS 333961, is on the quiet side of the complex.  It enjoys high occupancy and rental income.  It might be just the right property for an investor looking to get started in Maui.






 

For a luxury property, we are featuring Honua Kai again.  Last month’s pick, a 2 bedroom unit with fabulous views, MLS #333517, is still out there at $1,399,000.

This month we like an 8^th floor 3 bedroom unit.  The views from that height should be grand.  Priced at $2,575,000, MLS 332684, it looks like a pretty good buy compared to the other 3 bedroom units and even the 2 bedroom units.  Honua Kai is on one of the best beaches on Maui, our favorite swimming and snorkeling beach, so keep it clean.  It is worth noting that the 3 bedroom units come unfurnished. 

For more information on these or any other listings send an email with your request to lee@alohapotts.com or, see all of the listings on Maui at www.alohapotts.com.

Homes sales still slow

The true picture shows sales even slower than the numbers indicate

The picture looks even weaker when you consider that the sales were buoyed by 28 sales in new developments and, of the 28 new homes sold, 61% were classified as affordable. 

Remove the new homes sales from the mix and there were only 38 resales.  Given that the contracts for new homes were inked months ago, the actual rate of sales is likely slowing even faster than the reported numbers indicate.

Given the current economic climate what does that mean for home sellers?

The month’s median price, which declined 14%, $90,000, from last month, may be giving us a preview.  The decline is significant, and you would have to go back to 2004 to find a lower median price.

The decline in the median is even more dramatic when we account for the affordables.  Wait a minute.  If those are the affordables, are the rest of homes the unaffordables?  Where is George Carlin when you need him?

The median for the non-affordable homes dropped from $800,000 in August to $603,949 in September, a fall of just under 25%.

We also saw the difference between asking price and selling price rise to 14% from recent averages of around 6%.  That may indicate some new found flexibility on the part of sellers.

Area Sales

The Central area of Kahului/Wailuku accounted for two thirds of all sales last month.  Even after we remove the affordable units, the central area is the most affordable place on Maui.  Twenty of the 22 lowest priced homes to sell were in the central district at a median price of $519,000.

The story for the rest of Maui is what didn’t happen.  Maui’s entire west side, Lahaina to Kapalua had only 2 sales: one for $4.4 million and one for $3.6 million.  That’ll help the median sales price.   

Highs and Lows

The lowest price paid for a Maui home, aside from the affordables, was a 3 bedroom one bath home in Happy Valley.  It was originally priced at $475,000, eventually reduced to $399,000 and finally sold for $365,000.

Proving that the high end isn’t immune to big price reductions, a 3 bedroom, 4 bath home on Pineapple Hill in Kapalua was originally priced at $5,390,000.  It was reduced to $4,850,000 and ultimately sold for a paltry $4,400,000.

Potts’ Picks

There are a few short sales and bank owned properties that look interesting this month.  A word of caution, buying a short sale takes patience.  This is a 3 bedroom, 2.5 bath home in a nice section of Kihei.  The asking price is $448,000.  If you would like to see it the MLS # is 333695.

We like a newly listed home in Makena/Wailea for our luxury home selection this month.  It is one of 10 beachfront homes in a gated community.  With 4,318 square feet, it has 4 bedrooms and 4.5 baths and sits on just under 1/3 acre. It’s MLS #333959 and the asking price is $12,988,000.

For more information on these or any other listings send an email with your request to lee@alohapotts.com, or see all of the listings on Maui at www.alohapotts.com.

Lot sales still slow

Inventory still rising

What can I say about land sales?  To put a positive spin on it, ala the current political season, land sales DOUBLED in September. 

That sounds pretty impressive until you realize there were only 3 sales in August.  And, so, as with last month we still have enough inventory to last roughly… forever.  

Of the 6 sales in September, two were residential lots that sold for $100,000 each and 2 were residential lots that sold for over $4.3 million each. 

For more information on vacant land, see all of the listings on Maui at www.alohapotts.com or send an email with your request to lee@alohapotts.com.

More fractionals

Fractionals gaining critical mass?

Fractionals have been a popular way to own property, especially vacation property, on the mainland for some time.  But, here on Maui they are still just getting started. 

One of the pioneering developments in Maui  is the Sands of Kahana.  This ocean front complex features very large, comfortable 2 bedroom units.  This month they have 6 new fractionals on the market ranging in price from $225,000 to $295,000. 

Additionally, The Club Residences at Aina Nalu were launched this month.  As with the other fractionals at aina nalu, the Residences offer 60 day intervals, with 1 bedroom units starting as low as $95,500.

The best buy for oceanfront with a wonderful ocean view is still Kealia.  Starting at $100,000 for a 60 day interval, these are hard to beat. 

See all the fractional listings at Aloha Potts Fractionals.  

Get more information and details

To get more information on property and trends, you can search all properties listed for sale at www.alohapotts.com.  If you can’t find what you’re looking for there, send us an email at lee@alohapotts.com, and we’ll do our best to get an answer for you.  As we get more requests for information, we’ll add new sections to the website, newsletter or both.

About The Aloha Potts Team

Aloha Potts is a team comprised of L. Lee Potts, MBA, REALTOR® R(S) and Barbara S. Potts, MBA, REALTOR® R(B) and former California CPA.  We are business people, and we treat our clients with the same care and service attitude that we would like to receive when we do business.  We are in business for pleasure and profit.  We expect that most of our clients will enjoy the property they own in Maui (pleasure), and it would be nice for everyone if your property performs well for you (profit).  Real estate can be highly speculative, and profits are never guaranteed.  So if you are buying property

in Maui, it’s a good idea to surround yourself with a professional team.

Lee Potts is the former President of an international software company and former Marketing VP of a publicly traded franchise organization.  Lee and Barbara are both licensed under Alohapotts.com Inc. in Lahaina and affiliated with Keller Williams Realty Maui, Kihei, Hawaii. 

Barbara Potts was a CPA with Ernst and Young before joining Apple Computer back when both Steve’s were there (Jobs and Woz).  She was also Director of Strategic Marketing for Grass Valley Group, a division of Tektronix, and a business broker in California.